Brazil Inflation November 2016

Brazil: Inflation falls to near two-year low in November

December 9, 2016

Brazilian consumer prices in November increased 0.18% over the previous month, which was below October’s 0.26% rise and undershot the 0.27% figure analysts expected. The rise in consumer prices was driven by higher prices for housing, clothing, transport and healthcare, while the price of food and drink and household equipment fell compared to the prior month.

Inflation dropped in October to a near two-year low of 7.0%, below September’s 7.9%. Inflation has fallen notably in 2016, leading the Central Bank to cut the SELIC interest rate twice this year to support an economic recovery. Despite the fall, inflation still remains above the Central Bank’s target band of 2.5%-6.5%.

Panelists participating in the LatinFocus Consensus Forecast see inflation closing 2016 at 6.9%, which is down 0.2 percentage points from last month’s forecast. For 2017, the panel expects inflation of 5.0%, which is unchanged from last month’s estimate.

Author:Oliver Reynolds, Economist

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In July, industrial production growth came in at 0.8% over the previous month in seasonally-adjusted terms, which was an acceleration from June’s revised 0.2% increase (previously reported: 0.0% month-on-month).

In June, economic activity rose 0.5% from the previous month in seasonally-adjusted terms, according to the Central Bank’s monthly indicator for economic activity (IBC-Br, Indice de Atividade Economica do Banco Central).